Concentration of Capital

Concentration of Capital

a process of consolidation of individual capital accumulations through capitalization of part of the surplus value.

The concentration of capital leads to increasing growth of the largest individual accumulations of capital within the totality of social capital. It differs from the centralization of capital, which is the increase of capital in the hands of one capitalist or a group of capitalists through absorption or annexation of other capital holdings. The two methods of capital increase are closely inter-related and differ only in the source of the capital growth; in the case of the concentration of capital the source is surplus value, whereas in the case of centralization it is the already existing capital accumulations.

The concentration of capital depends on a number of factors. First, at the given level of technology and the existing rates of surplus value, the latter’s size is defined by the number of simultaneously exploited workers, which in turn depends on the size of the capital. The capitalist can increase the size of the appropriated surplus value only if he increases the size of his own capital. Second, the minimum amount of individual capital that is necessary to run an enterprise increases with the development of capitalism and the rise of the level of technology. Third, competition and the tendency of the rate of profit to decrease force the owner of the enterprise to increase his capital.

Concentration is the basis of the centralization of capital. In turn, the centralization of capital to a large degree speeds up the process of accumulation. Other things being equal, the large capital formed by absorption and amalgamation of smaller capital holdings has a higher rate of profit and rate of accumulation than the rate that each of the component capital accumulations had before the amalgamation.

Today the main volume of capital is concentrated in the hands of monopolies. The monopolistic concentration of the capital is rapidly developing. For example, the number of joint-stock corporations in the USA—the joint-stock corporation being the most typical monopolistic form of capitalist ownership—rose from 470,000 in 1939 to 1,542,000 in 1968. The total current assets of nonfinancial corporations in the USA rose from $97 billion in 1945 to $572 billion in 1970. The number of amalgamations and capital mergers increased from 87 in 1939 to 2,307 in 1969. Mergers involve even the biggest monopolies. For instance, in the 1960’s the Philco Company, with a turnover of $400 million, was absorbed by the Ford Company, and the Pure Oil Company, with a turnover of $600 million, was absorbed by the Union Oil Company. The share of the joint-stock capital in the hands of the largest capitalists, those who make up the financial oligarchy, is growing. In 1967, the market value of all stock in circulation in the USA amounted to $650 billion. According to official statistical data, there were more than 20 million stockholders in the country. But shares worth $111 billion, that is, about 15 percent of the total, were concentrated in the hands of only 2,024 families. Moreover, because of the pyramiding system, they actually controlled a predominant share of all joint-stock capital in the country. The 207 wealthiest families controlled 482 corporations with total assets of $182 billion.

With the growth of concentration and centralization of capital, the percentage of the working class exploited by the largest capitalist monopolies increases and the class contradictions of bourgeois society deepen.

It proved, incontrovertibly, the disastrous effects of machinery and division of labour; the concentration of capital and land in a few hands; overproduction and crises; it pointed out the inevitable ruin of the petty bourgeois and peasant, the misery of the proletariat, the anarchy in production, the crying inequalities in the distribution of wealth, the industrial war of extermination between nations, the dissolution of old moral bonds, of the old family relations, of the old nationalities.

The concentration of capital income, however, is strongly procyclical, rising during recoveries (figure 5), and this suggests that capital income will become more concentrated at the top in the coming years of the recovery, helping to raise income inequality even further.

The concentration of capital and financial acumen in one of London's most influential areas will help investors understand that the UK could develop a multi-billion-pound green car industry that leads the world.

With the hindsight of 150 years, one is still amazed by the accuracy of Marx's analysis of the globalisation of production, the concentration of capital in fewer and fewer hands, the comments on family and religion and the shape they would take in the new world being formed and the warnings about impending wars, including the slaughter of wars on a global scale.

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